You may have been asked by a friend or family member to co-sign on a loan. Don’t do it! While it can be tempting to help out a friend or loved one in need, chances are you could be setting yourself up for some serious consequences.
Just Say ‘No’
Think about this: why would someone need you to co-sign on a loan for them? The short answer: because they cannot get approved for the loan on their own. This may be because they have poor credit, carry a delinquent borrowing history or have recently completed a Dallas bankruptcy case. In any case, lenders consider them a borrowing risk.
It may not seem like a big deal to simply sign the loan application, but doing so actually places a large responsibility on your shoulders. When you co-sign for a loan you are guaranteeing the loan repayment. This means that if the original borrower defaults on the loan, you agree to be fully responsible for repaying the loan. Not only are you now liable for the debt, but your credit may get damaged when the debt enters default. Before co-signing a loan, stop and think about whether this is a responsibility you really want to take on for the sake of a friend or family member.